Litigation

At the end of last week, the Judge handed down his decision in the Jian Ghomeshi case. The finding was that the Crown had not proven its’ case “beyond a reasonable doubt”. That is the technical definition of what needs to be established in a criminal case before someone is convicted of an offence.

In Business Litigation, which is generally a Civil matter, the burden of proof is: has the plaintiff proven their case “on the balance of probabilities”? This is often described as a lower threshold.

While this threshold is lower than the criminal requirement, it still exists and a Judge will not simply “take your word for it” that something happened. You must prove your case.

To prove a case, evidence is gathered: emails, notes, contracts, photos and witness statements. These all form an important part of proving your case.

If you “forget” something until the defendant’s lawyer is cross-examining you, the decision is not likely going to go in your favour. If a Judge decides you’re lying or colluded with people to build up your case, you’re definitely not going to win.

Believing you are entitled to Judgment is not the same as proving it: you must prove your case or you’re not going to win.

Recently we’ve had numerous inquiries from businesses outside of Ontario asking where they should start their litigation. Some of these businesses are considering suing where they are located and then enforcing their Judgment in Ontario using our Reciprocal Enforcement legislation.

While it is easier for those outside of Ontario to first obtain Judgment in their local jurisdiction, it may ultimately be more complicated if the defendant did not respond in the law suit brought in the other jurisdiction.
In that case, the plaintiff could end up re-litigating the case in Ontario, which is doubling the cost of litigation.

Generally, we recommend that you start your law suit where the debtor has assets. This ensures that once you do have your Judgment, you don’t have to incur additional legal fees to have your Judgment recognized before you enforce it.

There is not one simple answer to the question though, so ensure you obtain legal advice before you decide where you are going to sue.

I enjoyed my drive into the office today because the news included a story about the snow removal contractor, who failed to clear the highway I use daily from snow and ice last winter, being fined $ 900,000.00 for not doing their job.

To be clear: for me this was not just about taking four hours to get home instead of 45 minutes: it was about the danger of the condition of the roads. The roads were not crammed with motorists: the highway was virtually impassible. I vividly recall calling home and saying “I’m not sure I can get off the highway because all of the off ramps have collisions due to no salt on the ramps.”

In addition to hearing about the fine, I heard on the news that the company is still “fighting” the fine.

If you’re a business: could you be fined if you breach a contract? Could the person you just contracted with impose additional fees on you if you miss a fairly short deadline? Have you had your lawyer look over a contract if you don’t understand it?

We look over and recommend changes to many contracts for our clients before they sign them. Because of these changes, we have saved our clients a lot of money as well as time and energy on a business venture that was destined to be less than profitable for our client.

Some of the key issues we look for in contracts are: what law governs the contract? Many contracts coming out of companies from the USA will state that the laws of a specific State govern the contract. Worse yet, many contracts will require you to go to a specific County in a State in order to litigate: do you really want to have to retain a USA lawyer to protect your company?

Having a lawyer in our firm review a Contract will cost far less in legal fees than retaining our firm to litigate a poorly worded contract and you avoid conversations that start with “so, about that Contract you signed …..”.

Remember years ago when Martha Stewart had an “Apprentice” TV Show and she told one of the female contestants, there are no tears in Business? That was likely some of the best advice she gave during the show.

Tears are borne from emotion and the emotion in a Business should come after hours, not during.

As a Business Lawyer one of the most challenging types of business I deal with it “the family business”. Businesses which involve multi-generational family relationships can be the most difficult businesses to find solutions to what would otherwise be simple problems.

The best advice anyone can offer a family Business is to use lawyers to negotiate difficult issues. Cool heads, steeped in legal knowledge are the right people to resolve conflicts.

Lately, litigation involving Constructive Trusts in Family Businesses has seen an increase in acceptance by Canadian Judges. Older generations who live off the work of their children and grand-children cannot cut those children out of the business without compensation.

Litigation is the last place a family Business should end up in, however, at times, that is the only way to ensure everyone is dealt with fairly.

If you need help navigating these waters, without tears, please reach out to me.

This week I am speaking at the Law Society of Upper Canada’s Solo & Small Firm Conference on “Getting Paid”. If you follow our firm on Twitter this week (@andriessenlaw) you’ll find all tweets this week are related to the topic of getting paid. Some of the tweets are lawyer specific, but most are for every business.

It appears even Taylor Swift is chiming in on my “you deserve to be paid” mantra this week. Ms. Swift, rightly demanded that Apple pay artists for using their songs, even if Apple had made a business decision not to be paid for providing those songs for three months. As soon as she spoke up, Apple agreed to pay the artists for their work.

In order to get paid by a client/customer, a business needs to behave as if it expects to get paid. This is done by having procedures in place from the start of the customer relationship that make it clear this is a business, not a volunteer relationship.

Providing a written statement of what you will charge and when you expect to be paid is a good starting point. Once you have done that and the customer has agreed, if they try to change the terms in the future, you can always refer back to your starting point and remind them what they agreed.

Remember: if you do the work or provide a service, you deserve to get paid.

I could go on and on about this topic, and will at the Conference. If you would like to follow up more on how to get paid, feel free to reach out to me: I’m full of really good ideas on getting you paid, including threatening to write a nasty Top 40 song about the non-payer. Oh wait, that would be Taylor Swift’s go to strategy, not mind.

For over 23 years I’ve been a business lawyer and as a big part of that, I’ve sued debtors who owe my clients money.

Collection litigation is only an effective tool if it is done well. If the law firm is the only one making money, then it is not done well.

Our firm’s approach is to first ensure that there is “a pot of gold” at the end of the litigation rainbow. We search to ensure the debtors own property and confirm if there are Judgments against them already that any judgment we would obtain would have to share with.

If the debtor has property and/or is judgment free, we start litigation in the most cost effective way possible. If the claim is $ 25 000.00 and under, we start in Small Claims Court using our flat fee schedule. If the claim is in Superior Court, we use the Simplified Procedure to move the matter through the system as quickly as possible to contain legal fees for the client.

We ensure we do not start collection litigation in areas where mediation is mandatory. Mandatory mediation in a collection law suit is a benefit to a defendant: it increases the costs by approximately $ 2 500.00 and it is “another step” that has to occur before Judgment can ultimately be obtained.

We’re careful to ensure our clients understand the benefits of making a reasonable offer to settle early in the law suit, to ensure the Judgment includes an award of 100% of legal fees incurred from the date of the offer onwards.

All in all, we choose the quickest, most cost effective method to obtain judgment for our clients who are owed money.

We’re creative in our enforcement techniques as well – using the Oppression Remedy and Bulk Sales Act legislation to bring officers and directors into the law suit and expose their personal assets for enforcing Judgments.

We’re good at what we do and we enjoy collecting on behalf of our clients. We’d be happy to help you get paid as well.

I was at a trade show recently, not a boring legal trade show, but the Outdoor Adventure show (hey, I have a life that extends beyond Court Rooms – honest!) and I was overwhelmed by the way many vendors were blurting out information as we walked past their booths. Many of those people spoke so quickly, I had no idea what they were marketing and apparently neither did they. One vendor told us how her product was great for “exhibitionists”: she meant exhibitors. She was mortified when she realized she had been saying “exhibitionists” all weekend.

Fast forward to the Monday after that weekend and I had a great meeting with some entrepreneurs excited about starting a new venture together. I took the time to listen to their thoughts, then slowly explained what legal help we could provide that would suit their needs.

I didn’t go on in detail about the facts from latest Court decision that would impact their situation, I didn’t recite a law from memory and I didn’t use a lot of legal language. I listened and then, in plain English, gave them my advice.

Many lawyers are like the vendor selling to exhibitionists. They speak quickly and are not even aware of what they’re saying. They don’t connect with their clients as business people, they preach down as if law is a pulpit and the client is listening in a church pew (and has to put a lot in the offering plate).

Business law is a conversation between a lawyer and their client. Lawyers need to listen up and be in tune with their client’s business.

If you’d like to talk, I’m listening. (with apologies to Frasier Crane)

An interesting Ontario Court of Appeal decision was released on December 9, 2014 that impacts the costs of anyone trying to enforce a Judgment in the Province of Ontario by selling property owned by a debtor.

If there is a mortgage on a property, before the Sheriff will start the process of selling property so that the proceeds can be shared between all Judgment Creditors of a debtor, the Sheriff requires that the creditor, who is asking the property be sold, provide the Sheriff with a current Mortgage Discharge Statement.

The decision in Royal Bank requires that the creditor first try to obtain that information from the debtor, through an examination in aid of execution, before it bring a motion asking the Mortgagee (usually the mortgage company) to provide the information.

Usually, debtors do not attend examinations in aid of execution the first time. The process is generally one of serving a notice of examination (which must be served personally) then sending a lawyer to wait 15 minutes on the day of the examination for the debtor not to attend. Next a motion to obtain a Court Order to compel attendance must be brought. Then a second attendance occurs, which usually has a better chance of success. However, it is not unusual to bring a motion for Contempt of Court (which must be served personally) to require the debtor to actually attend at the examination.

If the debtor refuses to provide a Mortgage Discharge statement at the examination a further Court Order is required to compel that answer.

The average cost of the above process can quickly rise to $ 3000.00 if not more.

The Honourable Justice Hoy, in her dissent of the decision which found the above process to be required, noted:

“Many creditors are not as sophisticated as RBC, and can ill-afford the expense of being in and out
of court to enforce a valid judgment for a relatively modest amount.”

As this is the second time this issue has been considered by the Court of Appeal in Ontario, this is likely to remain the state of the law (unless it is appealed to the Supreme Court of Canada) for at least the next five to ten years.

Thankfully, the Court did provide a suggestion as to how to obtain the information without going through all of the legal hoops detailed here. The Court suggested if the litigation involves a contract, the contract can include a consent to release mortgage information in the event of a default.

Of course, I’m not sure how many parties will be willing to say, purchase a set of tires on credit and agree to the release of mortgage information to the company selling those tires.

As a law firm that acts for business creditors, this decision is frustrating for our clients as it leads to increased enforcement costs. However, if there is sufficient equity in the property, selling a debtor’s property to satisfy the Judgment can still make the client “whole” it will just take patience and money to get there.

Our federal government has made good on its promise from 2012 to end the days of bogus Canadian citizenship applications. I for one applaud these steps.

My parents and my wife’s family immigrated to Canada starting in the 1950’s. They settled in Canada, worked hard, married, raised families and made a life for themselves here. When able to do so, they each applied for and obtained their Canadian citizenship. They did so knowing full well that it meant a break from their previous life and that it represented the new life that they had come to Canada to pursue.

They did as so many others have done over the years – leaving behind their extended family, wrestling to overcome language barriers and learning the customs of a country foreign to them. They now enjoy fully the fruits of that labour, having all progressed into retirement.

If their nationality was ever queried by a stranger, as is normal given that English is a second language for them, each would say that they were Canadian and only then would advise of the country from which they had immigrated.

They did not come to Canada to obtain citizenship under false pretenses, thereby obtaining a Canadian passport and the ease of travel that accompanies such privileges. They did not return to their countries of origin shortly after arriving in Canada and thereafter falsely declare in their citizenship applications that they had been in Canada the entire time.

Such citizenship fraud is being investigated and prosecuted in Federal Court. Having proven that the citizenship application was fraudulently made, the rights associated with the privilege of citizenship are being stripped away.

The National Post recently reported on one such case: http://news.nationalpost.com/2014/07/28/blatantly-lying-loses-family-its-citizenship-but-earns-them-a-63k-bill-from-canadian-government/

Immigration lawyers are noting that investigation into this form of citizenship fraud has not been aggressively pursued in the past. This will not be the last such case that will be reported in the papers.

Our firm always looks at a litigation file that we’re starting from the perspective of how to obtain money (not just a paper Judgment) for our client in the fastest, most economical way possible. This is the viewpoint from which this Blog is written.

In Ontario, you must sue in Small Claims Court for matters that are $ 25 000.00 (without interest) and under. Claims over $ 25 000.00 can also be started in Small Claims Court, however, any amount over $ 25 000.00 will not be awarded.

There are times when it is more cost effective to start matters in Small Claims Court, however, the chronic delays in the Small Claims Court process are making those times few and far between.

It is the norm in Small Claims to have defendants request an adjournment of the first motion date, settlement conference date and trial date. Each of these adjournments can add an additional 3 to 6 months, per stage, to a matter. That can drag a Small Claims Court matter out for many more months, if not a year, than a Superior Court matter.

In Superior Court , adjournments are also generally granted if requested, however, adjournments are generally for a period of two to four weeks, not months.

The advantage of the lawyer controlling the Superior Court schedule creates a big benefit for the client in terms of moving the matter along and obtaining judgment in the quickest time possible.

Ironically, given the speed advantage of Superior Court, an undefended matter can often be litigated for less money and Judgment obtained much more quickly than Small Claims Court.

If your lawyer recommends dropping the amount of your claim to fit into the Small Claims Court limit, make sure that lawyer understands the delays in the system and the impact that can have on your claim.